Nvidia’s (NVDA) stock slipped over the past 24 hours, dropping 6.8% to $114.25, despite Alphabet (GOOGL) purchasing Nvidia’s AI chips. This decline occurred even as Alphabet, the parent company of Google, announced significant investments in cloud and AI infrastructure. Alphabet’s stock also fell, leading to a broader decline in artificial intelligence stocks.
Alphabet’s Heavy Investments
Alphabet’s recent earnings report revealed substantial investments in cloud and AI infrastructure. For the quarter ending June 30, Alphabet’s capital expenditures surged over 90% year-over-year to $13.2 billion. CEO Sundar Pichai emphasized the need for aggressive investment, stating, “When you go through a curve like this, the risk of underinvesting is dramatically greater than the risk of overinvesting for us.” Alphabet’s President, Ruth Porat, echoed this, indicating continued high spending on infrastructure.
Positive News for Nvidia
Despite Nvidia’s stock dip, Alphabet’s investments in AI could be beneficial for Nvidia. Alphabet’s Pichai highlighted the use of Nvidia’s H100 processors in Google Cloud’s A3 Mega service and announced that Nvidia’s next accelerator, Blackwell, will join Google Cloud in early 2025. According to Barrons, Ben Reitzes from Melius said in a research note, “There’s no 20% upside revision to [capital expenditure] this quarter—but it sure seems there could be upside to the outlook from here if management wants to see revenue upside from Cloud and AI Search.”
Sector-Wide Impact
While Nvidia faces a challenging market, other AI and semiconductor stocks also suffered.
Using TipRank’s Stock Comparison tool we can see that over past 1 month, Nividia (NVDA) fell by 9.4%, Alphabet (GOOGL) fell 6.2%, Advanced Micro Devices (AMD) dropped 9.8%, and Broadcom (AVGO) decreased by 4.3%. Texas Instruments (TXN), however, saw a 2% increase due to strong quarterly earnings, positioning it as a potential safe haven amid sector volatility.
